Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 9, Problem 19SQ
To determine
The price charged by the
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Why is there a price markup over marginal cost in
monopolistic competition?
a downward-sloping demand curve, price exceeds
marginal cost
The graph shows the demand curve and marginal revenue
curve of Whitewater, Inc., a producer of rubber rafts in
monopolistic competition.
Draw the marginal cost curve if the firm produces 150 rafts
a week. Label it.
Draw a point at the intersection of the MC and MR curves.
Draw a point to show the price that Whitewater charges for
a raft when it produces 150 rafts a week.
Draw an arrow to show the amount of Whitewater's
markup.
What is Whitewater's markup?
Whitewater's markup is $750 a raft.
750-
675-
600-
525-
450-
375-
300-
225-
150-
75-
0
Price and cost (dollars per raft)
50
100
150
Quantity (rafts per week)
D
MR
200
>>> Draw only the objects specified in the
question.
21
Monopolistically competitive firms are most likely to have profits:A. That are higher than competitive firms’ profit in the long run.B. Higher in the long run than in the short run.C. Zero in the long runD. Equal to the profit of a monopolist.
A monopolistically competitive firm faces demand given by this equation: P = 50 – Q . It has no fixed costs and its marginal cost is $20 per unit. What price will the firm charge when it is maximizing its profits?
a.
$25
b.
$30
c.$35
d.
$20
Chapter 9 Solutions
Micro Economics For Today
Ch. 9.1 - Prob. 1GECh. 9.1 - Prob. 2GECh. 9.2 - Prob. 1YTECh. 9.4 - Prob. 1YTECh. 9 - Prob. 1SQPCh. 9 - Prob. 2SQPCh. 9 - Prob. 3SQPCh. 9 - Prob. 4SQPCh. 9 - Prob. 5SQPCh. 9 - Prob. 6SQP
Ch. 9 - Prob. 7SQPCh. 9 - Prob. 8SQPCh. 9 - Prob. 9SQPCh. 9 - Prob. 10SQPCh. 9 - Prob. 11SQPCh. 9 - Prob. 12SQPCh. 9 - Prob. 13SQPCh. 9 - Prob. 1SQCh. 9 - Prob. 2SQCh. 9 - Prob. 3SQCh. 9 - Prob. 4SQCh. 9 - Prob. 5SQCh. 9 - Prob. 6SQCh. 9 - Prob. 7SQCh. 9 - Prob. 8SQCh. 9 - Prob. 9SQCh. 9 - Prob. 10SQCh. 9 - Prob. 11SQCh. 9 - Prob. 12SQCh. 9 - Prob. 13SQCh. 9 - Prob. 14SQCh. 9 - Prob. 15SQCh. 9 - Prob. 16SQCh. 9 - Prob. 17SQCh. 9 - Prob. 18SQCh. 9 - Prob. 19SQCh. 9 - Prob. 20SQ
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Similar questions
- Does the monopolistic firm make a profit, loss, or zero economic profit in the long run?arrow_forwardA perfectly competitive firm is expected to make a $0 economic profit in the long-run. What type(s) of profit would you expect a monopolist to earn in the long-run? Why the difference? Use the editor to format your answerarrow_forwardLike the monopolist, the monopolistically competitive firm: Question 33 options: a faces a downward sloping demand curve. b is a price taker. c sets the price where marginal cost equals marginal revenue; the demand curve doesn't matter. d All of these statements are true.arrow_forward
- Assume a monopolistically competitive firm encounters a decrease in average variable cost at all output levels.We would expect: a. The price to rise and output to rise b. The price to fall and output to fall c. The price to rise and output to fall d. The price to fall and output to risearrow_forwardIf the price is less than actual total cost for a monopolistic competitive firm, does the firm make a profit, loss, or break-even?arrow_forwardHow might advertising make markets less competitive? How might it make markets more competitive? Give the arguments for and against brand names. What are the three reasons that a market might have a monopoly? Give two examples of monopolies, and explain the reason for each. List the three key attributes of monopolistic competition. What kind of agreements is illegal for businesses to make? What is meant by competitive firm? what is meant Perfect competition? what is market structure? What is economics?arrow_forward
- A. How does the demand curve faced by the firm in monopolistically competitive market differ from the demand curve faced by a firm participating in a purely competitive market? b. How does that impact how the firm sets its price and the quantity the firm produces?arrow_forwardIn the long run, the economic profits for a monopolistically competitive firm will bearrow_forwardBecause of limited competition, oligopolists can not make an economic profit even in the long run. Select one: a. False b. Truearrow_forward
- If a firm is operating in a monopolistically competitive market, then in the long run: A. the firm will maximize its profit by producing the output level at which the marginal revenue is minimized. B. the firm will earn zero economic profit. C. the firm will maximize its profit by producing the output level at which the average cost is minimized. D. all of the abovearrow_forwardIn a monopolistic competition market structure it is likely that if a company is earning profits it can maintain those profits in the long run ... Group of answer choices a. false b. truearrow_forwardExplain monopolistic competition. How is it similar to perfect competition? How does it differ from perfect competition?arrow_forward
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